Contrarian Alert: Bond Funds on Sale

Some closed-end bond funds have been battered while their net-asset values have risen, making for bargains for the savvy.

"Be fearful when others are greedy and greedy when others are fearful" is one of Warren Buffett's famous dictums. As Tobias M. Levkovich, Citigroup's veteran strategist, relates, his contacts suggest investors are decidedly on the greedy side, with talk of the broad stock market ending 2013 up 30%-40%, which means they have to plow more into equities even with a 20% gain already this year.

To old timers, that sounds echoes of 1987, when the stock market melted up in the face of rising bond yields through the...